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May 22, 2015

Why the $5.7 Billion Dollar Fine on Big Banks Is Actually a Joke

On Wednesday, the Justice Department announced that 5 major banks will be fined a total of about $5.7 billion. The banks plead guilty to manipulating global currency and interest rates as far back as 2007. Citigroup, JPMorgan Chase, Barclays the Royal Bank of Scotland, and Swiss bank, UBS, will pay fines that symbolize the government’s desire to reign in the power of the financial elite.

The New York Timespainted the fines as a win because while banks have entered guilty pleas before, they have always been from subsidiaries of the parent companies. This time, the parent companies themselves plead guilty.

What is more unsettling about today’s DOJ tap on the wrist is that while major banks must pay $5.7 billion, in the first quarter of 2015, customers were charged $2.5 billion in overdraft fees. Three major banks (JPMorgan Chase, Wells Fargo, and Bank of America) took $1.1 billion of this total. Some 600 others raked in the rest. Still, the “earnings” made up only 6% of bank profits for the major three involved. Overdraft fees for a single year could easily cover the $5.7 billion charged to the banks today. This discredits the alleged effectiveness of fining financial institutions for these transgressions.

Though it is predictable that a government bought and paid for by bankers refuses to seriously address the stranglehold of their power over the economy and government, it is outrageous that the DOJ is attempting to portray such meager fines as a win for the people.

“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”